Council Finance
The council must prepare estimates of its income and expenditure annually for the following year. Before a prescribed date, it is to prepare estimates, revise as necessary, and approve them, authorizing expenditure included in the estimate. This is to fix the amount required to be raised by means of a council rate.
Expenditure is not to be incurred unless authorized in accordance with approved estimates or previously authorized by the council. There is an exception for emergency circumstances.
Councils must make safe and efficient arrangements for the receipt and expenditure of money.
All income of a council is to be carried to a district fund, and expenditure is to be made from it. A council may also establish a capital fund and a renewal and repairs fund for capital and repairs purposes.
Sums from the sale of assets or surplus income may be paid to the capital fund. Except as allowed under the legislation, moneys may not be applied from the capital fund without the approval of the Department.
Where the Department is satisfied with the reason and the nature of the expenditure incurred, the expenditure should be met by borrowing and repayment over a term of years. The council may borrow on such terms as the Department approves. The council may approve without Departmental consent by favoring a temporary loan or overdraft to meet temporary expenses pending the receipt of revenues or to defray expenses pending the raising of a loan.
The council may borrow without the consent of the Department, sums necessary to provide working capital or meet other expenditure.
A council may borrow by mortgage, issue of stock, bonds, overdraft, temporary loan, use of capital funds’ money. Monies borrowed are charged on all funds, rates, and revenue. This is not a legal charge in the sense of security.
Generally, securities and instruments issued by the council are to rank equally without priority. Monies borrowed by the council are generally to be paid by means of yearly or half-yearly interest payments and by means of sinking fund repayments.
Persons lending money to a council are not bound to inquire as to whether the borrowing is legal or regular or properly applied. They are not to be prejudiced by any illegality or irregularity or misapplication of monies.
Regulations provide for the form of securities, register of securities, questions regarding title to securities, discharge of loans, and other issues concerning securities.
If sums are unpaid two months after demand, a person entitled to the security may apply to the High Court for the appointment of a receiver of council funds. Provisions apply to a security by way of mortgage, stock or bond, or any prescribed security created by regulations.
The council may, in accordance with schemes approved by the Department, establish consolidated loan funds for defraying expenditure to be let by borrowing and for repayment and redemption of debt. Schemes may make provision for payments in and out of the fund, for keeping separate accounts of receipts and outgoings of the fund and the investment of fund assets.
Councils may accept, hold, and administer gifts of any kind of property, for any local public purpose, or for the benefit of the inhabitants of the district or part of the district. They may provide and maintain works, facilities, and amenities incidental or consequential to the same.
A council may make payments for any purpose which in the interest of or will bring direct benefit to the council; district, or its inhabitants or any part of the district or its inhabitants.
The council may make payments to any fund raised in connection with a particular event directly affecting persons in the United Kingdom on whose behalf a public appeal for contributions has been made.
Total payments under the above categories are limited to a relatively small proportion of the ratable value of property.